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Climate and land sales in the Karoo, 2004 – 2021
by WCDOA pubs
Riaan Nowers1 and Beatrice Conradie2
Economic Services, Western Cape Department of Agriculture, Private Bag x1, Elsenburg 7606 3University of Cape Town
Introduction
Despite the important information conveyed by land prices and the copious amounts of data we have on the topic, land markets are not receiving the attention they deserve. This analysis is for the Central Karoo and covers the period 2004 to 2021. The primary data source is Landbouweekblad whose regular land sales reports are compiled by farm type and district by Riaan Nowers of the Western Cape Department of Agri-culture (WCDoA).
In competitive markets price is determined by demand and supply. Supply is fixed and in the Karoo demand is a function of growing conditions, which have been tough since 2013 (Conradie and Theron, 2019), a lively demand for lifestyle farms (Reed and Kleynhans, 2009), renewable energy projects and land reform.
On balance these factors probably caused land prices to rise in real terms, although the long-term outlook with consideration of climate change might be working in the opposite direction.
The market for farmland in the Karoo
The WCDoA dataset classifies land sales into three size classes, >1000 ha, 100-1000ha and <100ha, and of these only the largest size is relevant to commercial farming in the Central Karoo. Prices from various years were brought into a common currency by inflating with the “all areas, all items” consumer price index (CPI) published in the Abstract of Agricultural Statistics (DALRRD, 2021) and to measure the land price trend, the natural logarithm of real prices was regressed on year to obtain the growth rates reported in Figure 1 and Table 1 (next page).
